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C.

RIGHT TO PURCHASE

The Lessee shall have the exclusive right to purchase the Land Plot at any time during the Lease Term in accordance with such procedures as may be established by RF Legislation in accordance with the Land Code. The purchase price for the Land Plot shall be equal to the market value of the Land Plot as of the date of such purchase, excluding the market value of the Improvements and any other alterations made to the Land Plot by the Lessee , and reduced by the Ruble Equivalent of the US dollar value of all Lease Payments (plus interest on such Lease Payments of __% per annum (calculated on the basis of a 360day year), applied to the period from the date of each Lease Payment to the purchase date), made by the Lessee prior to the purchase date. Unless otherwise required by RF Legislation, the purchase price for the Land Plot shall be determined in accordance with the preceding sentence by an international auditing firm with an office in St. Petersburg appointed by (and at the expense of) the Lessee. Both Parties hereby agree to accept the purchase price as thus determined. If such purchase price has a negative value, the Lessor shall obtain all necessary authorizations and take all other steps as may be required under RF Legislation to ensure payment to the Lessee of such negative amount, whether from budgetary resources or other sources acceptable to the Lessee, promptly following the date of such purchase.

If requested by the Lessee, the Lessor shall provide all necessary assistance to the Lessee in registering ownership rights to the Land Plot with relevant government bodies following a purchase of the Land Plot by the Lessee

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LESSON 15

CONTRACT LAW

LOAN AGREEMENT

PART I

1.Read and translate the extract from the RF Civil Code:

ARTICLE 807. LOAN CONTRACT

1.Under a loan contract, one party (the lender) transfers to the other party (the borrower) money or other generic things, and the borrower is obligated to return to the lender the same amount of money or equal amount of things of the same kind and quality.

The loan contract is deemed concluded from the time of transfer of the money or other things.

2.Foreign currency or currency valuables may be the object of a loan contract on the territory of the Russian Federation, provided the rules set forth in Articles 140, 141, and 317 of this Code are followed.

ARTICLE 808. FORM OF THE LOAN CONTRACT

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1.A loan contract between individuals shall be concluded in writing in the event its amount exceeds at least by ten times the minimum monthly wage established by law, and in the event the lender is a legal person – irrespective of the amount.

2.To confirm the loan contract and its terms, a borrower’s receipt or any other document certifying the transfer of a specific amount of money or a specific quantity of things may be presented.

ARTICLE 809. INTEREST UNDER A LOAN CONTRACT

1.Unless otherwise provided by law or by loan contract, the lender is entitled to receive an interest from the borrower on the amount of the loan in the amounts and in accordance with the procedure prescribed by the contract. In the absence of a provision in the contract on the interest rate, the rate shall be determined by the prevailing interest rate (refinancing rate) at the place of residence of the lender, and fi the lender is a legal person – at its seat, on the date of payment by the borrower of the amount of debt or its respective part.

2.Unless there is a different agreement to that effect, the interest shall be paid monthly until the day of return of the amount of the loan.

3.The loan contract shall be considered interest-free, unless it otherwise provides, in the instances when:

-the contract is concluded between citizens for an amount not exceeding fifty times the minimum monthly wage established by law, and is not related to performance of entrepreneurial activity by at least one of the parties:

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-under the contract instead of money generic things are to be transferred to the borrower.

ARTICLE 810. RESPONSIBILITY OF THE BORROWER TO RE- TURN THE LOAN AMOUNT

1.The borrower is obligated to return to the lender the amount received by him within the time limits and in accordance with the procedure provided by the loan contract.

In the instances when the time of return is not specified in the contract or is determined by the time a demand for payment is made, the loan amount shall be returned by the borrower within thirty days from the time a demand for payment is made by the lender, unless otherwise provided by the contract.

2.Unless otherwise provided by the loan contract the amount of interest-free loan may be returned by the borrower prior to maturity.

The amount of an interest-bearing loan may be returned prior to maturity with the consent of the lender.

3.Unless otherwise provided by the loan contract, the amount of loan shall be deemed returned at the time of its transfer to the lender or at the time the proper amount is credited to the lender’s bank account.

Note: the Russian Civil Code makes a distinction between loan agreements and credit agreements. The latter are a type of loan agreements that covers only monetary loans, so any credit agreement under Russian law is governed not only by the specific Civil Code articles referring to that

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type of contracts but also, to a certain extent, by the provisions relating to loan agreements (Art. 819(2)).

ARTICLE 819. CREDIT CONTRACT

1.Under a credit contract, a bank or any other credit organization (creditor) undertakes to provide funds (credit) to the borrower in the amount and on the conditions provided by the contract, and the borrower undertakes to return the received amount of money and pay interest on it.

2.The rules specified in paragraph 1 of this article shall apply to the relations arising from a credit contract, unless otherwise provided by the rules of this paragraph and otherwise indicated by the nature of the credit contract.

ARTICLE 820. FORM OF THE CREDIT CONTRACT

A credit contract shall be concluded in written form. Noncompliance with the written form shall entail the inva-

lidity of the credit contract. Such contract shall be deemed void.

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ARTICLE 821. REFUSAL TO EXTEND OR RECEIVE CREDIT

1.The creditor has the right to refuse to grant a credit provided by a credit contract to the borrower in full or in part if circumstances exist which clearly suggest that the amount granted to the borrower will not be returned on time.

2.The borrower has the right to refuse the receipt of a credit in full or in part, having notified the creditor thereof before the time scheduled by the contract for its disbursement, unless otherwise provided by law, other legal acts or the contract.

3.In the event of a violation by the borrower of the responsibility provided by the contract with respect to the purposeful use of the credit (Article 814), the creditor shall have the right to refuse to disburse further credit to the borrower under a contract”.

2.Translate the structure of the Loan Agreement given below. Remember the highlighted terms.

Section 1. Commitment................................................................

1The Loans. .......................................................................

2Manner of Borrowing Loans. ..........................................

3Notes; Evidence of Debt..................................................

Section 2. Payments of Principal and Interest. .............................

1Repayment of the Loans.

2Interest. ............................................................................

3Voluntary Prepayments ...................................................

4Mandatory Prepayments ...................................................................................................

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Section 3. Payments; Pro Rata Treatment; Computations, Etc. ...

1Payments..........................................................................

2Computations...................................................................

Section 4. Yield Protection and Illegality.....................................

1Illegality...........................................................................

2Taxes................................................................................

3Compensation ..................................................................

Section 5. Conditions Precedent...................................................

1Conditions to Initial Loan

2Conditions to All Loans.................................................................................................

Section 6. Representations and Warranties ..................................

1Existence..........................................................................

2Financial Condition. ........................................................

3Litigation .........................................................................

4No Breach ........................................................................

5Action ..............................................................................

6Approvals.........................................................................

7Taxes................................................................................

8Nature of Business...........................................................

9Licenses for Operation of Business .................................

10Solvency ..........................................................................

11No Default on Outstanding Judgments............................

12Security............................................................................

Section 7. Covenants of the Company .........................................

1Financial Statements; Reports and Other Information

2Litigation .........................................................................

3Existence, Etc ..................................................................

4Payment of Obligations ...................................................

5Liens ................................................................................

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6Mergers and Consolidations

7Business ...........................................................................

8Transactions with Affiliates.............................................

9Subsidiaries..................................................................................................................

Section 8. Events of Default.........................................................

Section 9. Miscellaneous..............................................................

1Waiver .............................................................................

2Notices .............................................................................

3Expenses, Etc...................................................................

4Amendments, Etc.............................................................

5Successors and Assigns ...................................................

6Assignments.....................................................................

7Survival............................................................................

8Captions ...........................................................................

9Counterparts.....................................................................

10Governing Law ................................................................

JURISDICTION ..............................................................

Rule of Construction.................................................................

Severability...............................................................................

Marshalling; Recapture.............................................................

Waiver of Jury Trial..................................................................

3. Translate into English:

Предварительные условия, основной долг, проценты, незаконность, судебные разбирательства, отсутствие нарушений, защита доходов и незаконность исполнения, финансовая состоятельность, обеспечение исполнения обязательств, особые обязательства компании, случаи неисполнения обя-

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зательств, правопреемники и цессионарии, самостоятельность положений, сохранение силы положений, заголовки, экземпляры, передача имущества, восстановление обязательств, отказ от обращения в суд присяжных, объединения и присоединения.

NOTE: The RF Civil Code provides for the following types of corporate restructuring:

-объединение (merger)

-присоединение (acquisition)

-разделение (split-up)

-отделение (split-off)

-преобразование (transformation)

PART II

DEFINITIONS AND ACCOUNTING MATTERS

1.Translate into Russian:

a)Definitions and Accounting Matters, Collateral, Commitment, Commitment Termination Date, Event of Default, Final Maturity Date, Interest Period, LIBOR, Loan Documents, Material Adverse Effect, Notes, Prime Rate, Security Agreement, Security Documents, Uniform Commercial Code;

b)“Collateral” means all right, title and interest of the Company in the Holding Company and all right, title and interest of

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the Company in and to the Investment Agreement, and all earnings, dividends, distributions and other proceeds and products of the foregoing, all as more fully described in the Security Agreement.

“Commitment” shall mean the obligation of the Lender to make a loans to the Company pursuant to Section 2.1 hereof in an aggregate principal amount up to but not exceeding US$______________.

“GAAP” shall mean generally accepted accounting principles in the United States of America consistently applied (unless otherwise specified in this Agreement).

“LIBOR” shall mean, for any Interest Period (a) the rate determined by the Lender to be the offered rate for US Dollar deposits, for a period approximately equal to such Interest Period and, if the amount is so quoted, in an amount approximately equal to the principal amount of the Loans, quoted as of approximately 11:00 a.m. ([London] time), two Business Days prior to the first day of such Interest Period, as such rate appears on the display designated as page “3750” on the Telerate service (or such other page as may replace “3750” on the Telerate service or such other service as may be nominated by the British Bankers’ Association as the information vendor for the purpose of displaying British Bankers’ Association Interest Settlement Rates for US Dollar deposits) (“Telerate Page 3750”), or (b) if, as of 11:00 a.m. ([London] time) on any such date such rate does not appear on the Telerate Page 3750, the London interbank offered rate as of such time as determined by the Lender in its sole discretion.

“Lien” shall mean, with respect to any asset or other property, any mortgage, lien, pledge, charge, security interest, attachment, option or other encumbrance or adverse claim of any

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